Baroness Hollis of Heigham: My Lords, is that £7.20 through to £9.20 of the personal allowance? I should know this point but perhaps the Minister will forgive me. Is that the personal allowance only of the

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adult concerned? There is no proportional top-slicing from the children's benefits, for example. I am trying to protect the position of the children.

Lord Mackay of Ardbrecknish: My Lords, I understand that. The figures I am looking at show the maximum reduction from income support in IS cases. I do not know whether that answers the noble Baroness's question. If indeed the figures relate to the personal rate of income support to which the noble Baroness refers, it is £7.20. I imagine that if someone has income support for themselves and their children, he or she has a totality of income support and the maximum is as I have suggested: £7.20 or £9.60. However, I will check on that point before the next stage.

The noble Baroness asked me about the discretion. If recovery is likely to be detrimental to the health or welfare of the debtor or a member of the family, then the Secretary of State exercises discretion to abandon or reduce the rate of recovery. Recovery is automatically waived in the following circumstances: if income support is in payment and if the claimant is 70 or over and is senile or has long-term physical or mental illnesses and does not have capital in excess of £500 and has no disregarded income. The Secretary of State also has the power to waive recovery of an overpayment in exceptional cases where recovery would be harsh or unjust.

Normally, a person is invited to make a voluntary offer to repay. If no offer is forthcoming, or any offer that is forthcoming is not acceptable, the Secretary of State may then make compulsory deductions. Those deductions usually start 28 days after the adjudication officer's decision, so as to allow the claimant time to consider appealing against the overpayment decision. The claimant has the right to appeal for up to three months after the decision is made.

On the question of the order of priority on deductions from weekly entitlement, the recovery of overpayment is tenth on the list. It comes after a fair number of other deductions: mortgage interest direct; housing costs; service charges for fuel and rent; fuel debts; water charges; community charge/council tax; repayment of fines; child support maintenance; and social fund loans. Recovery of overpayments is at the bottom of the list. I hope that that answers the direct question that the noble Baroness put.

Baroness Hollis of Heigham: My Lords, am I therefore right in believing that, if it comes to that, it is not actually repaid, because there is a general cut-off point beyond which no more top-slicing may occur?

Lord Mackay of Ardbrecknish: My Lords, if someone is making some of the payments I listed above

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and the recovery of overpayments reaches the total amount that we allow for deductions, then the recovery of overpayments will have to wait for a better day; or, depending on its size, on the decision of an adjudication officer, the recovery may be waived.

The general policy on recovery is well-established. If an overpayment is determined to be recoverable, we seek to recover it without causing undue financial hardship. Discretion arises on the implementation of this policy, and the Secretary of State may decide not to pursue his right to recover if representations are made either by the customer or by someone on his or her behalf.

Each case is judged on its merits. As a general guide, where recovery of the overpayment is likely to be detrimental to the health or welfare of the debtor, as I explained in one particular example, or is considered excessively harsh or unjust, it is likely that it will be abandoned or mitigated in some way. The policy is pursued in a sensitive way. However, as we have all agreed, it is right and proper that it should be pursued in those cases where it can be and where it is quite clear that fraud or misrepresentation has taken place.

I hope that I have answered the points raised. I look forward to what I trust will be a short Committee stage.

On Question, Bill read a second time, and committed to a Committee of the Whole House.